Cash-strapped consumers are spending less on leisure, entertainment and eating out, but are still happy to splash out on holidays, a survey revealed.

The CBI said that its latest quarterly survey of services firms showed that business activity among consumer-facing services firms fell at its fastest rate since the end of 2001.

Businesses like hotels, restaurants, cinemas and gyms are enduring a difficult combination of lower consumer spending and higher costs, which saw profitability in the sector hit its lowest level in at least 10 years.

Travel firms were the only consumer services firms to report growth in business over the last quarter, although they too were hit by soaring cost rises and suffered the fastest fall in profitability for five years.